Gold Declines After Monthly Advance as Physical Purchases Slow

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gsr-23145Gold retreated after posting the first monthly advance since August as physical buying across Asia slowed during the Lunar New Year.

Bullion for immediate delivery lost as much as 0.2 percent to $1,242.15 an ounce and was at $1,244.48 at 8:48 a.m. in Singapore. Prices gained 3.2 percent in January as the MSCI All-Country World Index of equities fell 4.1 percent on concern that a rout in emerging markets may worsen.

Markets in China, which probably overtook India as the largest gold consumer in 2013, are shut for holidays through Feb. 6. Volumes for the benchmark contract on the Shanghai Gold Exchange slumped on Jan. 30 to the lowest level since June 2011. Holdings in the SPDR Gold Trust, the biggest exchange-traded product backed by bullion, posted the first two-day expansion since December 2012 on Jan. 30.

“The Chinese market is on a one-week break, taking some momentum out of physical purchases,” Edward Meir, an analyst at INTL FCStone, wrote in a note dated today. “We suspect that the global equity markets will likely see more turbulence in February, which likely will mean that gold should be fairly resilient for a little while longer.”

Rising physical demand in Asia has helped bullion to rebound from a six-month low on Dec. 31, when prices capped the biggest annual drop since 1981. Central bank rate increases in Turkey, India and South Africa last week failed to contain January’s 3 percent selloff in emerging-market currencies, while a Chinese manufacturing gauge fell to a six-month low in January.

Gold Positions

Gold for April delivery gained 0.3 percent to $1,243.80 an ounce on the Comex. The net-long position jumped 40 percent to 60,672 futures and options in the week to Jan. 28, the most since July, U.S. Commodity Futures Trading Commission data show.

Silver fell 0.4 percent to $19.1173 an ounce, after posting a third monthly loss in January. Palladium was at $703.74 an ounce from $703.69 on Jan. 31, when prices capped a third month of declines.

Platinum decreased 0.1 percent to $1,375.50 an ounce, dropping for a third day. The biggest producers are considering a proposal in a bid to end strikes in South Africa, the Commission for Conciliation, Mediation and Arbitration said Feb. 1, with talks due to resume tomorrow.